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Be careful—we’re in the late innings: Strategist

Stock took a dip on Thursday, with the S&P losing ground for the third straight session. And at this point, after a 190 percent rally from the market's nadir, ConvergEx's chief market strategist, Nicholas Colas, warns that investors could be buying into the market at their own peril.

Most investors "are missing that we are in the seventh or eighth inning of a big move," Colas said on Thursday's "Futures Now." "And I think you do have to begin to be a lot more tactical. If you do have big gains, take them off the table. If you want to have one final puff of the cigar, be my guest, but be careful."

Colas says that one might have expected the S&P to drop more than it did on Thursday off of crude oil's Iraq-related spike, but at this point, investors have become lulled into complacency.

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"We haven't had a 10 percent pullback for over 30 months. That's gotten deeply ingrained into buyer psychology. It's going to be tough to shake them out of that. Which is why I think you're still seeing a lot of resilience given the headlines we're seeing and oil," Colas said.

Traders work the floor of the New York Stock Exchange
Getty Images
Traders work the floor of the New York Stock Exchange

Crude oil rose to a nine-month high on Thursday's geopolitical news, and "very typically, economic expansions come to a screeching halt when you get a big pop in oil, and that is what's going to drive near-term volatility. You're seeing a little bit of it today, but let's face it, a nine-handle move on the S&P's with oil prices spiking is very small," Colas said. That "really speaks to how much complacency is still baked into the system."

Read More The 'death of volatility' forces traders to get creative

So without selling everything, what's an investor to do?

"Point No. 1 is that you can safely buy volatility here—either through your favorite options chain, or going directly to VIX-linked instruments for a near-term pop in volatility, because you are at, historically, very low levels," said the strategist. "You do have to keep in mind that we're coming up on quarter-end and there will be that window-dressing trade as well as the Russell rebalance the final week of June, so I wouldn't say it's the right time to get superbearish here. But volatility is clearly cheap."

—By CNBC's Alex Rosenberg.

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